New White Paper Explores Extreme Weather and Rising Insurance Costs

Both commercial and residential real estate owners are experiencing massive growth in the cost of insurance premiums as the number and magnitude of natural disasters escalates. A new SitusAMC white paper, “Natural Disasters and Real Estate: The Unprecedented Rise in Insurance Costs,” explores cost trends over the past six years, which states have been hardest hit, and how insurers are reacting to the heightened risk.  

Download free 29-page report, authored by Peter Muoio, PhD, Head of SitusAMC Insights, and Jen Rasmussen, PhD, Vice President, SitusAMC Insights, here. 

"The U.S. has seen a steady increase in weather-related disasters—up to nearly 67,000 in 2024—with annual damages averaging $17 billion,” Muoio said. “Florida and California have experienced particularly severe financial impacts, compounding stress on both private insurers and public insurance backstops.” 

Here are key highlights of the report: 

CRE insurance costs are surging, with premiums rising an average of 15% annually since 2019—more than double the pre-2019 average. By Q4 2024, insurance expenses hit $0.13 PSF, nearing all-time highs; they now account for 6.5% of total operating expenses across all sectors. 

Apartments and retail properties are bearing the brunt, with insurance costs jumping 68% and 61%, respectively, over the past three years—well above the 49% growth seen across all CRE sectors. In Q4 2024, apartment and office sectors tied for the highest insurance costs at $0.24 PSF. 

Insurance costs vary sharply by location, with California, Florida and New York seeing the highest CRE insurance premiums—driven largely by their exposure to climate risk and recent extreme weather events. 

Homeowners insurance premiums are rising even faster than home prices, up 74% since the 2008 financial crisis, versus a 40% gain in inflation-adjusted home values. The average annual premium now approaches $2,000, fueling a growing underinsurance gap. 

Coverage is becoming harder to secure in high-risk areas, with nonrenewal rates climbing, especially in parts of the central, southern and western U.S. Insurers are increasingly retreating from markets with heightened exposure to natural disasters. 

Download the free report here. Learn more about SitusAMC Insights’ research, analytical tools or RERC data products on our website.